Norwegian oil giant Statoil ASA ( STO - Analyst Report ) along with its partners has decided to advance on the development of Aasta Hansteen –– a field in the Norwegian Sea. This capital intensive project is estimated at about NOK 32 billion ($5.8 billion).

The decision for development, which was anticipated by the end of 2012, was pushed over to 2013 as it involved the construction of a new 480-kilometer (298 miles) gas export pipeline from the field to the Nyhamna processing plant near Molde. This requirement made it difficult for the project partners –– Statoil, OMV and ConocoPhillips ( COP - Analyst Report ) –– to come to a decision.

The participants are now preparing to submit their plan for the development and operation (PDO) of the field to the Petroleum & Energy Ministry early this year so that they get their consent in the spring session of the parliament.

The uncertainty with respect to the progress of the Aasta Hansteen development was partly due to the arguments regarding cost sharing of development of a new pipeline, Polarpipe, which cost about NOK 11.1 billion.

The partners of Aasta Hansteen have engaged 10 other Norwegian Sea players in the pipeline investor group to talk about cost sharing of the estimated NOK 11.1 billion for the Polarpipe link. Some players have worked up a plan that is suitable to both Aasta Hansteen partners as well as other companies that might want to use the route in the future.

Statoil, the operator of the field, is expected to hand over the PDO for Aasta Hansteen and for the Polarpipe to the Petroleum & Energy Minister early next week. The development of this field will open up avenues for gas pipeline connection to the Barents Sea. This will offer an export solution for future field developments in the remote Arctic region.

Lying in a water depth of 1300 meters –– Aasta Hansteen –– will be developed by Statoil using the world’s largest spar platform. The field is expected to start production in late 2016.

Statoil holds a Zacks #5 Rank (short-term Strong Sell rating). For the longer term, we maintain our Underperform recommendation.